DAT companies should steer clear of asset-backed debt to endure potential bear markets, according to Bit Digital CEO Sam Tabar, speaking with The Block at the Token2049 conference in Singapore.
Focus on Ethereum and Caution with Debt
Tabar emphasized the approach to debt financing. He noted that leveraging borrowed funds allows companies to increase their cryptocurrency per share while maintaining the same number of shares.
However, the choice of debt type is crucial. The expert stressed that an incorrect leverage level could easily destroy a business.
The Bit Digital CEO pointed out that many Ethereum treasuries use secured debt, which becomes “extremely risky” during market corrections.
“When asset values plummet, creditors start demanding their investments back, targeting the company’s funds,” he explained.
To avoid such risks, Bit Digital opts for unsecured debt. On September 30, the company announced the issuance of $135 million in convertible bonds.
Preparing for a “Crypto Winter”
Besides its cryptocurrency focus, Bit Digital is actively developing its artificial intelligence division, WhiteFiber.
In August, the organization conducted an IPO and raised $159.4 million, according to Bloomberg. Bit Digital retains 71% of the subsidiary’s shares, which now operates as a separate public company.
“For us, the ideal position is a combination of investments in Ethereum and artificial intelligence,” Tabar noted.
He emphasized that this approach allows for risk diversification and preparation for a bear market.
Trends in Crypto Treasuries
According to The Block, the growth of treasury companies reflects institutional interest in crypto assets: public organizations are expanding their “digital reserves” beyond Bitcoin (4.1% of the market) to Ethereum (2.9%) and Solana (2.6%).
However, altcoin-focused DATs may lead to premature token monetization by insiders, disrupting the vesting process.
U.S. regulators are already investigating suspicious trades before cryptocurrency purchase announcements. Notably, the SEC suspended trading in shares of Hong Kong’s QMMM Holdings, which planned to acquire Bitcoin, Ethereum, and Solana worth $100 million, due to suspicions of price manipulation via social media.
Crypto treasury structures are forming a new trend by issuing their own stablecoins to strengthen their ecosystems and compete with established tokens like USDC.
An example is the Sui Group Holdings structure. According to The Block, the company plans to launch two stablecoins on the Sui blockchain by the end of 2025: suiUSDe (yield-bearing for holders) and USDi (non-yielding) in partnership with Ethena. SUI token reserves, which after a recent increase of 20 million exceeded $300 million, intensify competition in the stablecoin segment.
Forecast and Strategy
The Bit Digital CEO expressed confidence in Ethereum’s long-term potential. According to Strategic ETH Reserve, the corporation holds 120,310 ETH valued at approximately $526.9 million.
At the time of writing, the coin is trading at $4,388. Over the past 24 hours, the asset has gained 2.2%, according to CoinGecko.
Back in June, Bit Digital announced a shift from Bitcoin mining to Ethereum staking.